Insurance Firm to Refund $4 Million in Fees After Class Action
Clal Insurance will return NIS 15 million (approximately $4 million) in management fees to policyholders following a class action lawsuit. The company will immediately refund 30% of the fees and offer a 12% discount on future fees until the end of the pension policy period. The lawsuit, initiated by Hussein Abu Hussein and represented by attorneys Eyal Goldenberg and Adi Kastelbaum, alleged that Clal improperly collected management fees from both monthly premiums and accumulated savings on its "profit participation" policies, sold between 1999 and 2004.
While the policyholders will receive a partial refund and a future discount, the plaintiffs and their lawyers are set to receive an initial payment of NIS 3.75 million (approximately $1 million). Their total fees and rewards could reach up to NIS 8.65 million (approximately $2.3 million), representing 17% of the total settlement amount. This arrangement, though not unusual for class action suits, highlights how plaintiffs and their legal teams often benefit significantly and quickly, even before the represented group fully realizes the gains.
Clal Insurance had argued that its fee collection practices were based on explicit permits from the Capital Markets, Insurance and Savings Authority and were detailed in policy documents and regular statements to policyholders. In 2023, the Regional Labor Court in Tel Aviv approved the class action request concerning fees collected from accumulated savings, but not from monthly premiums.
The parties reached a settlement through mediation, which was submitted for court approval. The State Attorney's Office had opposed parts of the agreement, including the 30% refund rate and the fee structure for the plaintiffs' lawyers, arguing it could be derived from 40% of the management fees and include future discounts. However, Deputy President of the Regional Court, Dori Spivak, rejected this opposition, stating that while a higher refund was set in a previous case, it was not a binding precedent. He also noted that basing the lawyers' fees on the past collection base provides legal certainty and avoids complex monitoring of future discount implementation.
